Why Is Algeria Poor?

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ALGIERS — In recent years, reports have increased of Algerians, particularly young men, leaving their home country and illegally relocating to Europe in order to escape from poverty. Algeria, from the outside, does not appear to be a poor country, with its considerable yields in energy exports and relatively stable government. But a large number of its 40 million inhabitants seem not to benefit from these relative luxuries. With this in mind, why is Algeria poor?

It is estimated that more than one-third of Algerians live in poverty, with a further 10 percent seen as vulnerable to falling into such a state. Unlike other nations with similar issues, approximately 75 percent of the poor live in urban areas, either in informal employment or heavily reliant on subsistence agriculture to survive. Several reasons have been suggested for the levels of poverty reported across the country, however it appears that no single issue is the primary cause.

Unemployment is often seen as the main reason of poverty in Algeria. While government policy has significantly lowered rates from 30 percent to 10 percent since 2000, this still leaves many people heavily affected and unable to earn a wage. Algerian youth are particularly hard hit by unemployment, with between 25 and 30 percent of all 16-24-year-olds unable to find gainful employment, which should be particularly troubling going forward. With approximately 30 percent of the population in Algeria under the age of 15, this problem could become much worse without proper policy intervention.

Algeria has a large reliance on energy, with the sector making up 95 percent of all exports and contributing 60 percent of the government budget. As such, much of the foreign direct investment entering the country is focused on this industry, which is unlikely to offer much in the way of new jobs or small and medium enterprises. The huge focus placed on energy hinders the country’s ability to reduce unemployment.

Additionally, such reliance has left the country open to global market fluctuations, leading to a budget crisis as a result of the worldwide drop in oil prices. This further impacts the Algerian poor, with government subsidies and welfare initiatives appearing to be affected due to the loss of income from the sector.

Another answer to the question ‘why is Algeria poor?’ is that the country suffers from significant social inequalities. It is estimated that a gap of around 28 percent exists between rich and poor in the country, meaning resources are less likely to find their way to those in need. The economic downturn currently being observed in the country is expected to only compound this issue, meaning it is likely that the gap between rich and poor will continue to widen.

Answering the question ‘why is Algeria poor?’ is by no means simple, however the above outlines several issues which could each be seen as a part of the cause. Government policy aimed at alleviating these concerns could reduce the inequalities and levels of poverty throughout the country. However, without a concerted effort from all parties involved, the situation is unlikely to improve.

Gavin Callander

Photo: Flickr

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